Tapestry Plans $3 Billion Buyback to Offset Tariff Costs by 2028

What's Happening?

Tapestry, the parent company of Coach and Kate Spade, announced plans to offset the impact of U.S. tariffs by fiscal year 2028. During its investor day, the company revealed a strategy to buy back $3 billion worth of shares over the next few years. The tariffs, imposed by President Trump, are expected to cost Tapestry approximately $160 million in fiscal 2026, particularly affecting the Kate Spade brand. Despite these challenges, Tapestry's CFO Scott Roe expressed confidence in growing gross and operating margins by fiscal year 2027 and beyond. The company anticipates that momentum at Coach will drive sales to $10 billion in the long term, while Kate Spade is projected to return to profitable topline growth by fiscal 2027.

Why It's Important?

The announcement is significant as it highlights Tapestry's proactive approach to managing the financial impact of tariffs, which have been a contentious issue in U.S. trade policy. By planning a substantial share buyback, Tapestry aims to reassure investors and stabilize its market position. The company's strategy to mitigate tariff costs reflects broader challenges faced by U.S. businesses reliant on international manufacturing. Success in offsetting these costs could set a precedent for other companies navigating similar trade barriers, potentially influencing industry practices and investor confidence.

What's Next?

Tapestry's focus will be on executing its buyback plan and implementing measures to enhance margins despite tariff pressures. The company will likely continue to monitor trade policies and adjust its strategies accordingly. Stakeholders, including investors and industry analysts, will be watching closely to see if Tapestry can achieve its financial targets and maintain growth amid ongoing trade tensions.